Brazilian Rare Earths Unlocks Strategic Bauxite-Gallium Opportunity Through Rio Tinto Deal Restructure

Key Highlights:

• Rio Tinto’s US$40M milestone replaced with a flexible royalty agreement
• High-grade bauxite and gallium mineralisation confirmed at Amargosa and Pelé projects
• BRE positioned to offer a stable, non-Chinese gallium supply amid geopolitical volatility
   

In a strategic shift set to reshape its development trajectory, Brazilian Rare Earths Ltd (ASX:BRE) has inked a landmark deal with Rio Tinto, replacing a US$40 million milestone payment with a production-based royalty for its Amargosa Bauxite Project in Bahia, Brazil. The move not only frees up capital but provides BRE with greater flexibility as it accelerates exploration and development of one of the highest-grade bauxite-gallium provinces globally.

The restructured agreement ushers in a US$1.00 per wet tonne life-of-mine royalty, eliminating upfront liabilities and Rio Tinto’s bauxite offtake rights. The deal also includes a reduced buy-in option for any nickel project within the Amargosa tenements, now priced at US$25 million.

At the heart of BRE’s strategy lies the Amargosa Bauxite-Gallium Project, a 748 km² zone rich in high-grade bauxite zones and gallium concentrations that are now considered among the best undeveloped resources worldwide. Extensive drilling by Rio Tinto over the past decade has laid the geological groundwork, with intercepts such as 27.5 metres grading 51.3% alumina and gallium assays hitting 190 ppm Ga₂O₃, confirming the potential for premium-grade export products.

The Pelé Bauxite Project, located within the rare earth-rich Três Braços Syncline, has also demonstrated widespread high-grade mineralisation. BRE’s re-assay of more than 9,700 metres of legacy Rio Tinto core supports the geological continuity required for a near-term JORC-compliant Mineral Resource Estimate, with RPM Global now onboard to fast-track a scoping study.

From a macro perspective, BRE is tapping into rising global demand and tightening supply chains for both bauxite and gallium. China’s 2024 export ban on gallium, a critical semiconductor material, exposed the vulnerability of Western supply chains. Gallium is essential for AI chips, satellite systems, and defense applications. BRE’s gallium-rich bauxite could help fill that gap, presenting a strategic alternative to Chinese dominance in this critical mineral.

The Amargosa region is also logistically advantaged—proximate to rail networks, renewable energy sources, and four deepwater ports within a 300 km radius. Coupled with Brazil’s favourable royalty regime and a supportive regulatory environment, BRE’s development economics stand on solid ground.

With shares up 8.71% to $1.935, BRE has shown signs of investor confidence, although it still sits 31% lower year-on-year. The latest news may well mark a turning point as the company advances toward unlocking a multi-mineral, high-grade opportunity in a geopolitically pivotal resource space.

As BRE’s CEO Bernardo da Veiga aptly summarized, “This agreement with Rio Tinto enhances our strategic flexibility to create long-term value for shareholders.”

With the global gallium race heating up and bauxite demand surging, Brazilian Rare Earths is emerging not just as a mineral explorer—but as a geopolitical player in the race for critical resources.